Brent, the international crude benchmark, has sprinted to $90 per barrel from $80 in just about a month on escalating tensions between Iran and Israel. “A war premium may quickly show up in oil prices in the paper market. Heightened tension in oil supply zone or main oil transit zones may also cause increases in crude oil transport and insurance costs,” said Mukesh Surana, CEO of Ratnagiri Refinery & Petrochemicals Ltd. In oil industry parlance, paper market refers to a financial marketplace where future oil delivery contracts are traded.
“If the situation escalates further to the extent that it starts impacting physical supplies through the Strait of Hormuz, it will impact the global supply situation and can have a sharper impact on prices in the short term,” said Surana, formerly chairman of HPCL.
Irrespective of the volatility in global oil prices, domestic retail prices of petrol, diesel and cooking gas are unlikely to rise for the next two months due to elections, industry executives said.
